The Geek’s Reading List – Week of June 10th 2016
I have been part of the technology industry for a third of a century now. For 13 years I was an electronics designer and software developer: I designed early generation PCs, mobile phones (including cell phones) and a number of embedded systems which are still in use today. I then became a sell-side research analyst for the next 20 years, where I was ranked the #1 tech analyst in Canada for six consecutive years, named one of the best in the world, and won a number of awards for stock-picking and estimating.
I started writing the Geek’s Reading List about 12 years ago. In addition to the company specific research notes I was publishing almost every day, it was a weekly list of articles I found interesting – usually provocative, new, and counter-consensus. The sorts of things I wasn’t seeing being written anywhere else.
They were not intended, at the time, to be taken as investment advice, nor should they today. That being said, investors need to understand crucial trends and developments in the industries in which they invest. Therefore, I believe these comments may actually help investors with a longer time horizon. Not to mention they might come in handy for consumers, CEOs, IT managers … or just about anybody, come to think of it. Technology isn’t just a niche area of interest to geeks these days: it impacts almost every part of our economy. I guess, in a way, we are all geeks now. Or at least need to act like it some of the time!
Please feel free to pass this newsletter on. Of course, if you find any articles you think should be included please send them on to me. Or feel free to email me to discuss any of these topics in more depth: the sentence or two I write before each topic is usually only a fraction of my highly opinionated views on the subject!
This edition of the Geeks List, and all back issues, can be found at www.thegeeksreadinglist.com.
1) Tesla Model S battery pack data shows very little capacity loss over high mileage
Its interesting battery chemistry doesn’t apply to a particular company. Well sort of. First, this is self-reported data and there is no particular reason to believe it is representative – especially with a cult company like Tesla. Second, having looked at the data itself, it does not appear they correct for the frequent battery replacements (i.e. if a vehicle gets a new battery after 2 years that battery’s life was 2 years, not 55,000 miles and counting on a new battery). That matters, a lot, if 55/844 vehicles have had batteries replaced within about 3 years as the data shows. Finally, it appears this reports what the car says the range of the battery and that is not a meaningful gauge of battery capacity. Battery capacity which can only be determined by putting the battery on a load and measuring how many watt-hours it delivers – you know, what real engineers or auto mechanics do to test batteries. Even the “improving” reliability statistics are misrepresented since (no kidding) newer cars are going to have fewer failures. The information has to be reckoned as “drivetrain replacements per 100,000 km traveled” or something like that.
“‘Lithium’ battery capacity degradation is one of the main concerns of electric vehicle buyers and potential buyers. Since the resurgence of electric cars is relatively recent, meaningful long-term data on large battery packs is fairly rare. Only Tesla has battery packs with a capacity higher than 30 kWh on the road in any significant number and they only have been in operation for a few years (Roadster aside). But a few Tesla owners have accumulated impressive mileage on their vehicles and the data provides an interesting look into potential battery capacity degradation. The electric vehicle advocate group, Plug-in America, is always independently gathering data on Tesla vehicles, especially through its Model S Survey.”
2) Tesla Suspension Breakage: It’s Not The Crime, It’s The Coverup
While meaningless garbage like the article cited in item 1 get plastered all over the Internet and mainstream media, things like this get buried, shouted down, or ignored. I’ve repaired a lot of cars in my time and I’ve never seen a ball joint that looks as bad as that. Regardless, the story points out Tesla’s bizarre way of dealing with customer complaints: sign an NDA or you are on your own. Since parts are only available from Tesla, you had better play ball and shut up if you want it fixed. You have don’t have to wonder why a car company would do such a thing, especially one with the horrific reliability record of Teslas. Mind you it’s a publicly traded company so maybe it’s important to maintain the illusion. Thanks to my friend Humphrey Brown for this item.
“For several months now, reports have circulated in comment sections and forum threads about a possible defect in Tesla’s vehicles that may cause suspension control arms to break. Many of those reports appeared to come from a single, highly-motivated and potentially unreliable source, a fact which led many to dismiss them as crankery. But as more reports of suspension failure in Teslas have come in, Daily Kanban has investigated the matter and can now report on this deeply troubling issue.”
3) What big ISPs don’t want you to know about data caps
The interesting with Internet and mobile services is that they are pretty much the only tech good which appears immune to Moore’s Law. After all the cost of the high tech end of things has plummeted and carriers don’t really do much beyond maintenance capital spending. So you can deliver more and more data over the same cables/spectrum at lower and lower cost and yet, strangely, bills go up. It’s almost like it’s a largely uncompetitive market – which is what it is.
“If you buy 10 gallons of gas, you should pay more than the person who buys just five gallons, right? That’s the argument Comcast and AT&T make as they impose data caps on more and more broadband customers. People today use much more data than ever before, they say, and it’s only fair that folks who use more data pay more. But there’s a flaw in that argument. “The cost of increasing [broadband] capacity has declined much faster than the increase in data traffic,” says Dane Jasper, CEO of Sonic, an independent ISP based in Santa Rosa, Calif.”
4) Nest’s time at Alphabet: A “virtually unlimited budget” with no results
What a totally expected outcome: Google paid $3.2B for a company that makes a product a small group of hackers could make over a weekend and then throws another $500M in acquisitions and who knows how much more money in salaries and they go no results. What do you expect? Almost all IoT products are pretty trivial to make so you aren’t going to get cutting edge engineering talent from an IoT company – even if you spend billions for it.
“Nest grew from 280 employees around the time of the Google acquisition to 1200 employees today. In Nest’s first year as “a Google company,” it used Google’s resources to acquire webcam maker Dropcam for $555 million, and it paid an unknown amount for the smart home hub company Revolv. Duffy said Nest was given a “virtually unlimited budget” inside Alphabet. Nest eventually transitioned to an Alphabet company, just like Google. In return for all this investment, Nest delivered very little. The Nest Learning Thermostat and Nest Protect smoke detector both existed before the Google acquisition, and both received minor upgrades under Google’s (and later Alphabet’s) wing. A year after buying Dropcam, Nest released the Nest Cam, which was basically a rebranded Dropcam. Two-and-a-half years under Google/Alphabet, a quadrupling of the employee headcount, and half-a-billion dollars in acquisitions yielded minor yearly updates and a rebranded device. That’s all.”
5) Google Says It’s Very ‘Serious’ About Gigabit Wireless
Running fiber through a neighborhood is expensive enough but the final connection to every consumer is where it gets seriously expensive. Besides digging up lawns, etc., you might have to damage pavement, risk hitting gas or water pipes, and so on. Short range wireless technology would lead to a dramatic reduction in capital cost since a single base station could serve everybody in a few hundred meter radius. It would also make deploying broadband much faster since you don’t need as many backhoes. This would most likely use unlicensed radio bands so Google wouldn’t even need to pay for the spectrum.
“Alphabet CEO Eric Schmidt told shareholders during the company’s annual meeting on Wednesday that Google Fiber is extremely “serious” about using fiber as an additional avenue to deliver additional broadband competition to stagnant markets. “To give you an idea of how serious this is,” Schmidt stated the executive had a “lengthy” meeting on Tuesday with Alphabet CEO Larry Page and Chief Financial Officer Ruth Porat to discuss the company’s wireless ambitions. Those ambitions include testing the viability of millimeter wave technologies and 3.5 GHz wireless broadband as part of an ongoing trial in Kansas City. “There appears to be a wireless solutions that are point to point that are inexpensive now because of the improvements in semiconductors,” Schmidt said. “These point to point solutions are now cheaper than digging up your garden and so forth.””
6) Why home 3D printing never lived up to the hype
The article has a pretty good post mortem on the idea of home 3D printing though it is a pity so much money was squandered before they came to these rather obvious conclusions. Setting aside the poor performance of low cost machines, and the limited choice of materials, most people don’t build stuff.
“”This notion of consumers buying their own machine and printing for themselves just is not working out, because it’s not easy,” he said. “You need to have some design talent, and most people aren’t designers. You need to learn design software, and most people don’t want to mess with it.” And 3D printers cheap enough for the consumer market tend to be less sophisticated than the industrial-strength models, Wohlers added. “3D printers that are affordable are limited in size, material color, surface finish, a lot of things,” he said. “You’re really limited as to what you’re going to print with them, even if you have some design experience.””
7) Gartner Says Worldwide Smartphone Sales to Slow in 2016
This is the time of year when all the industry analysts downgrade their estimates for existing markets (the ones you can measure) and upgrade their estimates for emerging markets (where nobody can dispute using real figures). I find the unit growth expectation to be quite high but there are a lot of cheap, good quality handset coming on the market and that might help unit demand. The problem is prices are going down so chances are revenue is going to go down a lot more than single digit unit growth might suggest.
“Gartner, Inc. said global smartphone sales will continue to slow and will no longer grow in double digits. Worldwide smartphone sales are expected to grow 7 percent in 2016 to reach 1.5 billion units. This is down from 14.4 percent growth in 2015. In 2020, smartphone sales are on pace to total 1.9 billion units. “The smartphone market will no longer grow at the levels it has reached over the last seven years,” said Roberta Cozza, research director at Gartner. “Smartphone sales recorded their highest growth in 2010, reaching 73 percent.””
8) The chip card rollout has been a costly nightmare for everyone involved
Whenever I hear about Apple pay I think about chip and PIN in the US. Somehow the rest of the world made the switch without too much bother, but US consumers and vendors seem to be in a uproar over this relatively ancient technology. Sorry about the auto play video at the begging. It is simply a demonstration of how awful Yahoo is: it makes noise while presenting a summary of the story in caption form. Somebody thought that was a good idea.
“The deadline for retailers to switch to chip-enabled payment cards was last October. This was when U.S. credit card companies, including Visa (V) and Mastercard (MA), announced new liability rules that would shift the burden of responsibility for fraudulent transactions to businesses if they didn’t update their technology. The chip cards, which use what’s known as EMV technology, have unique transaction codes that make them more secure. But even as the deadline has passed, merchants have delayed EMV migration. Many retailers have cited avoidance of long lines that develop from the slow process. And other retailers claim they have installed the card readers but are waiting for the credit card industry to do their part.”
9) The app boom is over
This seems like the week of obvious tech stories, except that this was probably obvious a few years ago. Apps are lightweight and complex function which requires cloud infrastructure is cheap enough to rent. There are only so many ideas and so many things you can get people to do with a few square inches of screen. Heck there hasn’t been any innovation in PC software in 15 so why should mobile software be any different?
“The mobile app boom kicked off in July 2008, when Apple introduced the App Store. Now it is over. People are still making plenty of apps, of course. And many people are still downloading them. But the go-go growth days are gone. If you are an independent app developer or publisher, you have probably known this for a while, because you have found it very difficult to get people to download your app — the average American smartphone user downloads zero apps per month. But now even the very biggest app publishers are seeing their growth slow down or stop altogether. Most people have all the apps they want and/or need. They’re not looking for new ones.”
10) Can You Program Ethics Into a Self-Driving Car?
Autonomous vehicles are 15 to 20 years away so we have lots of time to think about this. From a societal perspective both AVs and the enabling advanced safety features (which are already on the market) will save untold lives and vastly reduce pain and suffering from car crashes. From a lawyer’s perspective, as long as you can convince 12 jurors something isn’t perfect enough, you can profit. After all some lawyers recently convinced a jury baby powder is carcinogenic, all actual scientific evidence to the contrary, so AV litigation should be easy unless laws are crafted to limit it’s damages. Thanks to Alain Belanger for this item.
“Today no court ever asks why a driver does anything in particular in the critical moments before a crash. The question is moot as to liability—the driver panicked, he wasn’t thinking, he acted on instinct. But when robots are doing the driving, “Why?” becomes a valid question. Human ethical standards, imperfectly codified in law, make all kinds of assumptions that engineers have not yet dared to make. The most important such assumption is that a person of good judgment will know when to disregard the letter of the law in order to honor the spirit of the law. What engineers must now do is teach the elements of good judgment to cars and other self-guided machines—that is, to robots.”
11) Many Lexus navigation systems bricked by over-the-air software update
This sort of thing is a pretty serious. Not so much the loss of infotainment systems but you can imagine what might happen if the software for advanced safety systems gets borked during an over the air software update. At least old fashioned go to the deal and spend a fortune type updates would be scheduled and presumable checked out after the fact.
“Lexus social media channels have been flooded by frustrated owners, but the company has been unable to give any estimates for when the problem will be resolved. The company also couldn’t say whether customers will see the problem fix itself with another software update or if they will need to head into dealers to get it fixed. Some users on Twitter have reported success with disconnecting their battery for a few moments to force a reset of the system.”
12) Oracle Whistleblower Suit Raises Questions Over Cloud Accounting
There have been questions about Oracle’s cloud revenues for some time now. Like most companies they are probably trying to put their best foot forward and make it look like they are an important force in the business (external evidence to the contrary). Almost certainly they are doing so which is all according to accounting rules. Regardless, Oracle’s position in the cloud should be the least of investor concerns: their traditional, staggeringly expensive, centralized database solution is not the way modern developers solve modern problems. So, chances are their licensing revenue will gradually decline over time and there isn’t much they can do about it.
“Those questions are becoming more urgent as companies including Oracle, IBM, Microsoft and SAP race to transform their businesses for an era in which customers no longer own and operate their own information technology systems and instead lease computing services and software from cloud vendors using vast data centers. Blackburn’s lawsuit accuses Oracle management of pushing her to “fit square data into round holes” to make Oracle’s cloud services’ results look better. She alleges that her bosses instructed her to add millions of dollars of accruals for expected business “with no concrete or foreseeable billing to support the numbers.””
13) IBM has been awarded an average of 24 patents per day so far in 2016
A number of years ago, when I still bothered to read books on investing, I read a book about patents being a strong indicator of a company’s success. In retrospect what the author was actually saying was that big, successful companies have the money to be able to patent every dopey idea that pops into the mind of an engineer or scientist, and since the US patent system is broken having the money is more important than having an original idea. Mind you, IBM has lots of clever engineers and scientists so it is a pity they have had the witless leadership they have had for so long. After all this is a company which has missed every significant technological shift since the PC.
“The media tends to focus on the crazy things Google, Facebook, and Apple patent, but they’re still dwarfed by more traditional companies like IBM and Samsung when it comes to the number of patents they’re awarded each year. Through the first half of 2016, IBM has, yet again, been the leader in technology patents, averaging roughly 23.6 patents awarded each day.”
14) Optical Dreams, Virtual Reality
I remain sceptical about the prospects for VR. This article covers one part of the problem but implying that, somehow, progress has been made in simulator sickness is a bit off point since nobody, not even the military, really knows what causes it. It might be a disconnect between what you see and your vestibular system or it might be that and other things being out of whack (like depth of field, etc.). As the article notes, game developers deal with it by dialing back the intensity of the game – which kind of defeats the purpose.
“Yet an old question lurks behind these new scenes: Is the new technology good enough to protect users from the nausea-inducing effects, similar to motion sickness, that have been show-stoppers in the past? VR depends on optical tricks to generate the illusion of 3-D worlds and motion, but those tricks can’t fool all the senses—and eventually our sensory systems tend to rebel. Even 3-D movies and television are enough to make some people sick. Will isolating the user still further from reality make things even worse?”
15) For better or worse? Direct-to-consumer lab tests remove the physician ‘middle man’
It’s easy to see how certain tests – say for STDs, pregnancy, etc. – can be advantageous if done at home and the results may be a little easier to understand since they are pretty much binary. What is not exactly clear is how the average consumer is expected to interpret most medical tests, let alone place them in context since the data themselves are often subject to interpretation based on history and context. Nevertheless, if it is legal, companies will take advantage of it and, no doubt, offer all kinds of products and services to salve the consumer’s concerns.
“Many consumers are actively searching for ways to take a proactive role in their healthcare. Direct-to-consumer lab tests, which provide at-home tests for hormones and biomarkers — such as vitamin levels, cholesterol and inflammation — empower patients to identify potential health issues before they progress. But they also remove a traditionally integral factor to healthcare tests: the physicians. One company that provides such services is InsideTracker, according to The New York Times. This particular company also offers customers the option to send nurses to their homes and draw blood. While the convenience of DTC lab tests may be a plus for consumers, critics worry they lack proper medical oversight and convince healthy people they have medical issues, which could lead to unnecessary tests and treatments, according to the report. Despite these concerns, the market for DTC lab tests has expanded substantially. In 2015, the market was valued at $131 million, up from $15 million in 2010, according to Kalorama Information data cited by The New York Times.”
16) Using CRISPR to grow a human pancreas in a pig
I find it surprising they want to grow a human organ inside a pig since it would probably be a lot easier to make the pig’s organs invisible to the immune system. The part about potentially making a pig with a human’s brain is a little weird: pigs (and many other animals) are plenty smart but it hasn’t helped them yet. Unless the pigs learn how to talk and can afford a lawyer nobody is going to care.
“To cause a human pancreas to grow inside of a developing pig inside of its mother’s womb, the researchers use CRISPR gene editing to remove the genetic portion of a pig embryo that encodes for a normal pig pancreas. They then replace the removed portion with human stem cells. The end result should be a pig embryo that develops into a pig fetus and if allowed, to a fill sized pig after birth. At that time, the pancreas, which should be all human, would be removed and placed in a human suffering from pancreatic failure—offering a cure for diabetes and other pancreas ailments. Even more exciting is the possibility that if the process works, and is approved, a human in need of a new organ could donate the stem cells, which would mean the organ grown would have his or her DNA, which would mean they would not have to take anti-rejection drugs once the new organ is placed inside them.”
17) Wearable Artificial Kidney Completes First Clinical Trial And May Change Dialysis Treatment Forever
This is probably big news if you are suffering from kidney failure. The video is worth a watch but it does raise a number of questions like why would this be on a belt rather than in a shoulder bag or something. It may just be a prototype and they might hope to further miniaturize it but I probably wouldn’t be able to go for more than a few minutes without the tubes getting stuck on something.
“Current treatments typically are necessary three times a week, being hooked up to a stationary machine that does not allow patients to walk around while the machine is working. A wearable device would allow patients to become mobile and offer much longer and more frequent sessions without all the hassle. … The device was shown to effectively clear the blood of all waste products, such as urea, creatinine and phosphorus and also got rid of excess amounts of both water and salt. While the diet for those being treated by dialysis are very restricted, when using the Wearable Artificial Kidney, no limitations are required in order to keep patients’ blood electrolytes and blood fluid volume in perfect balance.
18) From a heart in a backpack to a heart transplant
This article caught my eye but it turns out there isn’t much new about it: artificial hearts have been used over 1,600 times as a ‘bridge to transplant’ and some people have even had them for longer. I had no idea. More information is on the video at http://www.syncardia.com/.
“All transplant patients are exceptional, but Stan Larkin’s successful heart transplant comes after living more than a year without a human heart and relying on a heart device he carried in a backpack. The first patient in Michigan ever discharged with a SynCardia temporary total artificial heart in 2014, Larkin was back at the University of Michigan Frankel Cardiovascular Center in May for a heart transplant.”
19) FoldiMate: Your Laundry Folding Friend
The animation is entertaining but animations of machines are a lot less credible than actual film of machines. I can’t help but wonder how long a Rube Goldberg device such as this would last, or the cost/benefit of a $700+ device to fold a few items of clothes.
20) Robots Are Invading Malls (and Sidewalks) Near You
Sounds scary but the robots are basically autonomous drones which bring things to people or wander around stores. It’s not exactly clear how the security robot is supposed to recognize to recognize “suspicious behavior” or what it would do about it. The best examples are the inventory robot and the delivery drones. It’s going to take a long time to get to a “Robocop”.
“Robots have been mingling with humans in several stores, too, including a Target in San Francisco, where a robot called Tally was used for a trial in which it trundled up and down aisles carrying out inventory checks—a mind-numbing task for humans. Tally detects when products are out of stock or moved so staff know to replace them. According to Tally’s creator, a startup called Simbe Robotics, it can complete an audit of a medium-sized store in around half an hour, with 96 percent accuracy. The same task would take a human 25 hours, and the company contends people are only about 65 percent accurate.”